Ask Question
28 December, 22:30

Now suppose that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run economic impact of the higher oil prices. In the long run, when the government pursues accommodative policy, the output in the economy will be $ billion and the price level will be

+2
Answers (1)
  1. 29 December, 00:40
    0
    Answer:The output will be $billion and the price level will increase.

    Explanation:Long term accommodative policies by government causes a shift to the right of aggregate demand curve in response to the left shifting of the aggregate supply curve in the short run.

    This change will definitely cause an increase in aggregate demand without a corresponding increase in aggregate supply to meet the demand.

    In doing this the government aims to permanently higher prices in order to restore employment and output to it's original level.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Now suppose that the government immediately pursues an accommodative policy by increasing government purchases in response to the short-run ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers